JOINT VENTURES
All arrangements which are made between two or more people or entities, and are more than transitory are “joint ventures”. Examples of typical commercial activities in this category are: production Joint Ventures; franchise arrangements; trading partnerships; shareholder agreements; long-term (6 months+) buy/sell arrangements; agencies; distributorships; and, joint development agreements.
The common theme is the existence of, and need for, an enduring relationship between the parties to the arrangement. The creation of such relationships requires skill and experience. There is a need for detailed analysis and understanding while maintaining clarity and avoiding the death of the deal through delay and frustration.
If the joint venture is between people or entities from different cultures, countries or backgrounds, the issues are multiplied and require even more careful handling.
Our experience of joint ventures includes transactions in industries as diverse as oil, gas, pharmaceuticals, commodities, textiles and real estate services, and in countries as diverse as India, China, Ghana, Sierra Leone, Nigeria, Europe and the USA. We can provide assistance in planning, negotiation, documentation and implementation as well as funding. We have access to a range of experienced professionals in many countries who, as needed, can be mobilized to help drive the negotiations to a successful conclusion.
Whatever your business funding needs, GM Capital has a proven track record in introducing the right investor to the right company, or finding the right loan for the right project.
GM Capital provides expert advice and support with all aspects of business funding, whether for equity finance, debt finance through a loan or asset finance to fund new purchases or release cash from plant, machinery and stock.
Equity Participation
During formal underwriting, the fund will determine its equity participation in the project--up to 35%. As such, they will take a minority interest in the project until completion or stabilization when they will look to exit the transaction via buyout, refinancing, sale of the project, etc.
Financing Advantages
The advantages of this financing structure are several:
The developer pays no interest during the entire construction period--potentially saving millions of dollars in interest expense;
Because the fund participates as a 100% joint venture equity partner, they assume 100% of the project risk until completion or stabilization;
Rather than the typical equity of 20% - 40% or more that is required in a traditional financing structure, the developer will only be responsible for a refundable deposit of up to 10% of the project cost. This will allow the developer to reduce their up-front capital requirements while retaining a larger percentage of the project than if they had to raise additional capital by selling investment interests.